Social Security Benefits Are Rising In 2023
Millions of seniors regard Social Security as a major retirement income source. And for some, those monthly benefits are their only source of income.
Meanwhile, seniors on Social Security recently got a bit of good news. In 2023, benefits will be eligible for an 8.7% cost-of-living adjustment , and that could go a long way toward helping recipients maintain their buying power as living costs surge.
But if you’re not careful, you could end up shrinking your Social Security benefits next year. And that’s a mistake you might then regret for the long haul.
Image source: Getty Images.
Your Monthly Social Security Benefits Increase The Longer You Wait To Claim
While you can collect Social Security benefits as soon as you turn 62, taking benefits before your full retirement age will spell a permanent reduction in your payments of as much as 25% to 30%, depending on what your full retirement age is.
If you wait until you hit full retirement age to claim Social Security benefits, youll receive 100% of your earned benefits. But you can do even better by waiting to claim your Social Security benefits at age 70 your monthly Social Security benefit will grow by 8% a year until then. Any cost-of-living adjustments will be included, too, so you dont forgo those by waiting. Think of that time as bonus earning years and remember that youd be hard pressed to find those sorts of gains for zero risk during that period anywhere else.
Waiting to claim your Social Security benefits can help your heirs as well. By waiting to take her benefit, a high-earning wife, for example, can ensure that her low-earning husband will receive a much higher survivor benefit in the event she dies before him. That extra income of up to 32% could make a big difference.
Eligible Family Members Include:
- Ex-spouses, if the marriage lasted for at least 10 years and they have not remarried
- Children under 18, or up to 19 if still enrolled in high school
- Children of any age who were disabled before 22 — that is, not earning more than $1,260 per month in 2020, having a medical condition that results in severe functional limitations and that is expected to last 12 months or longer or result in death
Spouses and ex-spouses must be at least 62 in order to claim benefits, and spouses and children must wait for the worker to begin claiming benefits themselves before they can claim family benefits on their record.
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When Youre Ready Contact Social Security To Sign Up:
- Apply online This is the easiest and fastest way to sign up and get any financial help you may need. Youll need to create your secure my Social Security account to sign up for Medicare or apply for Social Security benefits online.
- Contact your local Social Security office.
- If you or your spouse worked for a railroad, call the Railroad Retirement Board at 1-877-772-5772.
I Have Never Accessed Mysocial Security And I Do Not Have A Logingov Or Idme Credential:
Visit www.ssa.gov/myaccount to get started. You will have the option to create an account with our preferred credential partner, Login.gov. You can also access your information with an ID.me account if you have one. Keep in mind:
- You must be 18 years of age or older, have a Social Security number and a U.S. mailing address.
- You will be redirected to the partners website when you select Sign In with Login.gov or Sign in with ID.me.
- You must provide a valid email address and some additional information.
- Once you create the credential, you will return to the mySocial Security webpage for next steps.
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How Do Benefits Work And How Can I Qualify
While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:
- Those who are currently retired
- To people with disabilities
- To the surviving spouses and children of workers who have died
Each year you work, youll get credits to help you become eligible for benefits when its time for you to retire. Find all the benefits Social Security Administration offers.
There are four main types of benefits that the SSA offers:
Learn about earning limits if you plan to work while receiving Social Security benefits
The Advantage Of Claiming Earlier
Claiming earlier than FRA isn’t all bad. In return for accepting a benefit reduction, you get to collect income 18 to 24 months earlier. Depending on your situation, that may be more valuable than the higher monthly check. For example, you may have lost your job and you need the income to pay your bills. Or, you might want to enjoy some work-free years now, in advance of potential health declines.
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Beware The Social Security Earnings Test
Bringing in too much money in earned income can cost you if you continue to work after claiming Social Security benefits early. With what is commonly known as the Social Security earnings test for annual income, you will forfeit $1 in benefits for every $2 you make over the earnings limit, which in 2022 is $19,560. Once you are past full retirement age, the earnings test no longer applies, and you can make as much money as you want with no impact on benefits.
Any Social Security benefits forfeited to the earnings test are not lost forever. At your full retirement age, the Social Security Administration will recalculate your benefits to take into account benefits lost to the test. For example, if you claim benefits at 62 and over the next four years lose one full years worth of benefits to the earnings test, at a full retirement age of 66 your benefits will be recomputed and increased as if you had taken benefits three years early, instead of four. That basically means the lifetime reduction in benefits would be 20% rather than 25%.
When Should You Retire
To draw full retirement benefits, the following Social Security Administration age rules apply:
Born in 1937 or earlier – Full retirement can be drawn at age 65Born in 1938 – Full retirement can be drawn at age 65 years and 2 monthsBorn in 1939 — Full retirement can be drawn at age 65 years and 4 monthsBorn in 1940 — Full retirement can be drawn at age 65 years and 6 monthsBorn in 1941 — Full retirement can be drawn at age 65 years and 8 monthsBorn in 1942 — Full retirement can be drawn at age 65 years and 10 monthsBorn in 1943-1954 — Full retirement can be drawn at age 66Born in 1955 – Full retirement can be drawn at age 66 and 2 monthsBorn in 1956 — Full retirement can be drawn at age 66 and 4 monthsBorn in 1957 — Full retirement can be drawn at age 66 and 6 monthsBorn in 1958 — Full retirement can be drawn at age 66 and 8 monthsBorn in 1959 — Full retirement can be drawn at age 66 and 10 monthsBorn in 1960 or later — Full retirement can be drawn at age 67
Remember that while you can begin drawing Social Security retirement benefits at age 62, your benefits will be 25 percent less than what they will be if you wait until your full retirement age as shown above. Also keep in mind that no matter when you start drawing Social Security benefits, you must be 65 to be eligible for Medicare.
For example, people who waited until age 70 to retire in 2017 could get a maximum benefit of $3,538.
What If I Delay Taking My Benefits
If you retire sometime between your full retirement age and age 70, you typically earn a “delayed retirement” credit for your own benefits . For example, say you were born in 1960, and your full retirement age is 67. If you start your benefits at age 69, you would receive a credit of 8% per year multiplied by two . This means your benefit would be 16% higher than the amount you would have received at age 67.
How Can I Detect A Phishing Email Pretending To Be Social Security
- Most emails from Social Security will come from a .gov” email address. If an email address does not end in .gov, use caution before opening attachments or clicking on pictures or links in the email. Currently, Social Security sends emails from , , , , and echosign.com.
- In a few instances, we use marketing firms to raise awareness of Social Securitys online services, and this includes creating a my Social Security account. We allow these firms to send email directly to individuals. Any links you find within these emails should always point to a .gov/ web address.
- Links, logos, or pictures in the body of an official Social Security email will always direct you to an official Social Security website. Rather than relying on the way a link looks, please follow these steps to confirm a links authenticity:
- To verify the web address of a link or picture, hover over it with your mouse until a text box appears with the web address. This is the actual address you will be directed to and it should always include .gov/. A forward slash should always follow the .gov domain.
- Example – https://www.ssa.gov/myaccount/
- Links to the official Social Security website will always begin with or .
- Below are examples of fraudulent websites pretending to direct you to Social Security. Notice the location of the forward slash.
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The Easiest Way To Apply For Retirement Benefits Is Online
If you’re ready to retire and start receiving a Social Security check, first make sure that you’re eligible to apply for benefits. You must be a maximum of three months away from your 62nd birthday, and you must also be ready to start taking your benefits within the next four months.
Whats Full Retirement Age
Full retirement age is when youre eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: For anyone born in 1960 or later, full retirement age is 67. For those born in 1955 through to the end of 1959 , full retirement age ranges between 66 and 2 months and 66 and 10 months. If you were born before 1955, youve already reached age 66 and full retirement age.
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Benefit Reduction For Claiming Before Fra
To understand the benefit reduction for claiming at age 65, you must know your full retirement age . Your FRA is the age you qualify for your primary Social Security benefit. This is your benefit as calculated from your income history before any adjustments for claiming early or late.
Image source: Getty Images.
FRAs vary depending on your birth year. If you’re not yet 65, your full retirement age is somewhere between the ages of 66-and-a-half and 70. Specifically:
- If you were born in 1957, your FRA is 66 and six months.
- If you were born in 1958, your FRA is 66 and eight months.
- If you were born in 1959, your FRA is 66 and 10 months.
- If you were born in 1960 or later, your FRA is 67.
As you can see, your 65th birthday is 18 to 24 months before your FRA. This is where the benefit reduction comes in. For each month prior to FRA that you collect Social Security, your benefit is reduced by five-ninths of 1%.
Note that the five-ninths percentage applies only to the first 36 months. If you claim Social Security more than three years before your FRA, the reduction formula is five-twelfths of 1% for each month beyond 36.
The table below shows how the reduction formula applies to different FRAs and the claiming age of 65.
Table data source: Author calculations.
How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
If You Donât have a Bank or Credit Union Account:
- Direct Express debit cardâ a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
On Go Directâs FAQ page, learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.
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Documents You Need When Applying For Social Security
When its time to apply for your Social Security benefits, youll need to have the following documents in hand:
- Your Social Security card
- Your original birth certificate, or a certified copy
- Proof of U.S. citizenship or lawful alien status
- Military service papers, if applicable
- Your W-2 form from the last year
If you cant access any of these documents for one reason or another, dont hold off on applying. Your local Social Security office can help you obtain certified copies or equivalent information, or you can submit them later on in the process. Delaying signing up for benefits could result in you losing benefits.
Note that the SSA can accept photocopies of some of these documents, such as your W-2 and tax returns. However, youll need to submit the original of other forms, such as your birth certificate.
Applying For Social Security
- Generally, you should apply for Social Security retirement benefits three months before you want your benefits to begin. Even if you dont plan to receive benefits right away, you should still sign up for Medicare three months before you reach age 65.
- If you were born before 1938 and you meet all other requirements, you can receive benefits beginning with the first full month you are age 62. However, if you choose to begin receiving benefits before age 65, your benefits will be reduced to account for the longer period over which you will be paid.
- The full retirement age is 65 for persons born before 1938. The age gradually rises until it reaches 67 for persons born in 1960 or later. Social Security benefits are payable at full retirement age for anyone with enough Social Security credits. As you work and pay taxes, you earn credits that count towards eligibility for future Social Security benefits. You can earn a maximum of four credits each year. Most people need 40 credits to qualify for benefits. People who delay retirement beyond full retirement age get special credit for each month they dont receive a benefit until they reach age 70.
- To find out what your retirement age is, use the Social Security Retirement Age Chart at www.ssa.gov
- You should speak with a Social Security representative in the year before you plan to retire. It may be to your advantage to start receiving your retirement benefits before you actually stop working.
ave questions? Call at 874-4618.
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The Bleak Future Of Social Security
Aggravated by the COVID pandemic, the Social Security trust fund most Americans rely on for their retirement will run out of money in 12 years, one year sooner than expected, according to the annual Social Security 2021 Trustees Report published on August 31, 2021. The pandemic also threatens to shrink retirement payments and increase health-care costs for older Americans, according to the Trustees.
The Treasury Department oversees two Social Security funds: Old-Age and Survivors Insurance and Disability Insurance Trust Funds. These funds are intended to provide a source of income to former workers who have retired at the end of their careers or to those who cannot work due to a disability, respectively.
Social Security officials said that the Old-Age and Survivors trust fund is now able to pay scheduled benefits until 2033, one year earlier than reported last year. The Disability Insurance fund is estimated to be adequately funded through 2057, eight years earlier than in the report published in 2020.
In a press briefing, senior Biden administration officials said that a COVID-related spike in deaths among retirement-age Americans in 2020 helped keep the programs costs lower than projected. They also noted, however, that the long-term effects of the COVID pandemic on the Social Security trust funds is harder to project as costs and revenues return to their extended forecasts.
Should I Wait Until Full Retirement Age To Apply For Social Security
Receiving Social Security at age 62 means that you will receive a reduced payment compared with waiting for full retirement age. For those born in 1960 or later, the reduction is 30%, and all reductions are permanent. If you delay taking your benefits past full retirement age, then you receive an 8% increase for each full year that you do so, up until you reach 70, at which point the increases stop.
Every individual can calculate their own full retirement age based on their specific birthday, to consider locking in the maximum amount of Social Security benefits.
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